1a. If the single-member LLC is not an S corp, with no profit there can be no contribution to the Solo 401(k). Contributions to the solo 401(k) are limited to net-profit from self-employment minus the deductible portion of self-employment taxes.
1b. If the single-member LLC is an S corp, employee elective deferrals or Roth contributions are limited to compensation shown on the individual's W-2.
The deadline to elect an employee Roth contribution for 2022 was December 31, 2022 and the deadline to make an employer contribution was the due date of your 2022 tax return, including extensions. The tax code has since been changed for tax years 2023 and beyond to allow a self-employed individual to make the election up through the due date of their tax return, including extensions, with regard to a new plan established after year end.
If you make an excess elective deferral or Roth contribution, you have until April 15 (not the due date of the tax return) to obtain a corrective distribution. The amount distributed will be the excess adjusted for attributable investment gain or loss and any gain will be taxable in the year distributed. If the excess is not distributed, an excess deferral (but not a Roth contribution) will be taxable on the tax return for the year for which the contribution was made and the excess and any attributable gain will be taxable when eventually distributed. The result is double taxation of the excess amount. To avoid making an excess contribution as self-employed, you can make the election by December 31, 2023 but not make the contribution until you have determined your net profit.
The tax code has also been changed to allow employer contributions to be Roth contributions, but your plan may not have adopted that option.
